5 Reasons Why Your Business Can Fail

On Monday I wrote a short article talking about Sears demise and how I saw it coming nearly a decade ago. Many big companies like Sears that were once viewed as indestructible, are now gone.

No business is too big to fail, and judging by history, many of today’s big companies will be gone within 30 to 40 years. Think Apple, McDonalds, Verizon, Costco, Target, Facebook — any or all of these giants could be gone by 2050.

Let’s just go back in time real quick to see some of the big companies of the recent past that seemed too big to fail but are now gone:

#1 Woolworth’s

This used to be one of the greatest, if not greatest retail companies of all-time. It set trends. The Woolworth building in New York City was the tallest skyscraper in the world from 1913 to 1930.

By 1979 Woolworth’s was the largest department store chain in the world according to the Guinness Book of World Records. Market share slowly started to erode and by 1993 they closed half of their 800 remaining locations. A rapid decline continued from there and the company was soon bought out and is now just a memory to Baby Boomers.

#2 Pan American

Also known simply as Pan Am, this was once the world’s greatest airline. This company helped shape the international airline industry by launching the first widespread use of jumbo jets and computer reservation systems.

The brand became a cultural icon and by its peak in the early 1970’s it had over a billion in cash reserves, which in 1970’s dollar was a lot more than a billion today. By 1991 this once great company had gone bankrupt and Delta swept in to buy up their remaining assets.

#3 Circuit City

An electronic conglomerate, there were sprawling 30,000 sq. feet retail locations spread out in every city in America throughout the 1990s. The big box strategy eventually failed them as they couldn’t distinguish themselves from other Best Buys, Home Depots, Sears, and Lowes.

Their last-ditch effort to cut costs by lowering employee wages from $8.75 an hour to $7.40 only accelerated the loss of sales. By 2009 Circuit City was done.

#4 Kodak

A well-known company throughout the 20th century in photography circles, they got started too late switching over to the digital age.

They filed bankruptcy in 2012. But if you saw them in 1976, they dominated 90% of film sales in the U.S. and 85% of camera sales. Who could predict the mighty would fall so fast?

#5 Blockbuster

If you wanted to rent a movie, this is where you used to go. At its peak, Blockbuster employed over 84,000 people and had more than 9,000 stores.

It didn’t take long for Netflix and online video on demand to crumble this once great empire.

Despite the fact there a still a handful of physical stores left in Alaska (where the internet during the long winter isn’t as reliable), the brand is dead and it’s not coming back.

“If I told you in 1985 that all the above companies would be defunct within a generation, you’d have called me crazy”

But this is just a small sample of once-great companies that are no longer great. I could mention Polaroid, Borders, Enron, Remington Typewriters, Napster — you get the idea. Success today does not guarantee tomorrow’s success!

If These Great Businesses Can Fail, Your Business Can Fail Too

I’ve worked with many businesses over the years, both large and small, and many times businesses go bankrupt for a variety of reasons.

Here are 5 typical things that go wrong for a business on the way to bankruptcy — so watch out for these!

#1 Too Focused on Savings, Not Enough on Expansion:

Business are built to create income not on how much money they can save. Sears was interested in saving money and it’s the wrong approach. Businesses that don’t spend or invest enough in future growth will eventually start to have problems.

#2 Employees are Disengaged and Uninspired

Companies should look to engage and motivate their staff continually. Those that choose not to will see it reflected in their revenue sooner or later. How can you accomplish this? A great way to is to have a short daily meeting to tell the staff about what is happening, what the company is doing well, new expansion projects and how they are winning in the marketplace. This will provide the daily reinforcement you are looking for.

#3 Chasing problems that don’t create revenue

Most business owners looking to grow and expand will undoubtedly be faced with problems. The economy, competition, regulation, customers, disruption, etc. One of the big challenges facing business owners is often times they chase the wrong problem. Its like my buddy Mark Cuban says, “Sales cures all”. Stay connected to moving the bar. Have a high sales focus ingrained in your culture. Have vital sales stats reported daily… I even do it hourly in some cases.

#4 You’re Managing Not Leading

Companies are made of people and people want leadership. Not all people need managers, but everyone needs leaders. Leaders take action, they are decisive, and they have the ability to enlist people to support the cause. Bad leadership, or the absence of it will lead the company into dispersed actions, lost focus, and no mission. Leadership is a prerequisite for ANY successful company.

#5 Price Point is Too Low

Companies believe, incorrectly, that they should lower price in order to get their product out into the marketplace “and be competitive” rather than keep their price higher and build value. When margins are low and volume is low the business will cease to exist. There can only be one lowest price provider in a marketplace, more than that will result in a race to the bottom.

“Businesses fail, first and foremost, because their ideas weren’t sold fast enough, and at prices and quantities high enough to survive.”

Rest on your laurels, no matter how big you are, and all your successes will start to fade away. It happened to companies like Kodak, Woolworth’s, Sears, and Pan Am…and it almost happened to me about 10 years ago… so it can happen to you and your business!

I created 10X Growth Conference 3 as the world’s largest business conference (over 35,000 people!) to make sure YOUR business never goes OUT of business.

10X is a movement I created with my bestselling book the 10X Rule which you can get for free at grantcardone.com/10xbook

10X is about growth, it’s about expansion, it’s about living your dreams and making your business succeed.

Get your copy here: grantcardone.com/10xbook

Despite the recent news about companies like Sears and Toys R Us going under, there is an abundance of opportunity in the marketplace today — even in retail if you are properly equipped!

Be great,

GC

Grant Cardone is a New York Times bestselling author, the #1 sales trainer in the world, and an internationally renowned speaker on leadership, real estate investing, entrepreneurship, social media, and finance. His 5 privately held companies have annual revenues exceeding $100 million. Forbes named Mr. Cardone #1 of the “25 Marketing Influencers to Watch in 2017”. Grant’s straight-shooting viewpoints on the economy, the middle class, and business have made him a valuable resource for media seeking commentary and insights on real topics that matter. He regularly appears on Fox News, Fox Business, and MSNBC, and writes for Forbes, Success Magazine, Business Insider, CNBC, and Entrepreneur. He urges his followers and clients to make success their duty, responsibility, and obligation. He currently resides in South Florida with his wife and two daughters.